Mind the Gap: Inconsistencies Between Subjective and Objective Financial Risk Tolerance.
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| Title: | Mind the Gap: Inconsistencies Between Subjective and Objective Financial Risk Tolerance. |
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| Authors: | Marinelli, Nicoletta (AUTHOR), Mazzoli, Camilla (AUTHOR), Palmucci, Fabrizio (AUTHOR) |
| Source: | Journal of Behavioral Finance. Apr-Jun2017, Vol. 18 Issue 2, p219-230. 12p. |
| Subjects: | Financial risk, Default (Finance), Risk assessment, Accounting, Investments, Financial literacy |
| Abstract: | Investors' financial risk tolerance is crucial in the formulation of suitable financial advice; in the past, assessment efforts relied on multiple approaches and techniques, but their consistency is still an issue. The authors focus on 2 metrics traditionally proposed (self-assessment and portfolio composition) and test their mutual consistency on a sample of 2,374 investors. The approach allows them to discriminate between inconsistencies due to wrong portfolio compositions and those arising from wrong self-assessments. The authors show that low financial literacy, high income, no children, and incautious economic behavior are commonly associated with such inconsistencies. [ABSTRACT FROM PUBLISHER] |
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| Database: | Psychology and Behavioral Sciences Collection |
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| Abstract: | Investors' financial risk tolerance is crucial in the formulation of suitable financial advice; in the past, assessment efforts relied on multiple approaches and techniques, but their consistency is still an issue. The authors focus on 2 metrics traditionally proposed (self-assessment and portfolio composition) and test their mutual consistency on a sample of 2,374 investors. The approach allows them to discriminate between inconsistencies due to wrong portfolio compositions and those arising from wrong self-assessments. The authors show that low financial literacy, high income, no children, and incautious economic behavior are commonly associated with such inconsistencies. [ABSTRACT FROM PUBLISHER] |
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| ISSN: | 15427560 |
| DOI: | 10.1080/15427560.2017.1308944 |
